Thursday, November 28, 2013

By Mike Dorf
Today is "Thanksgivingukkah," the extraordinarily rare--as in once in 70,000 years--convergence of Thanksgiving and the first day of Hannukah. The strange confluence has provided pundits with the opportunity to promote oddball recipes like turkey corpse cooked in Maneschewitz wine or sweet- potato latkes. For me, as both a vegan and an ethnically-identifying-but-non-religious American Jew, the coincidence of these two problematic holidays provides an interesting opportunity for reflection. I find that the two holidays are in some ways mirror images: The core message of Thanksgiving was a pleasant lie but the holiday has become a horror show, whereas Hannukah's origins are terrible but it has become mostly harmless. Let me explain.

When I was in elementary school in the early 1970s, I was taught that the first Thanksgiving occurred in 1621 and it was a celebration of peaceful cooperation between native Americans (then still called Indians) and the Pilgrim settlers. It was always a bit of a myth and the holiday did not really get going until the 19th century. Then it evolved, first becoming more religious and then less religious, but that original idea of cross-cultural cooperation was something worth promoting--although I certainly understand how contemporary native Americans might resent the day as a whitewash of genocide.

As a vegan I find the mainstream contemporary version of Thanksgiving repugnant. From the White House "pardoning" of a particular turkey to the commonplace reference to Thanksgiving as "turkey day," Thanksgiving is one of the few occasions during the year when omnivorous Americans seem to acknowledge that their gustatory pleasure is purchased by killing billions of innocent beings. That very acknowledgment belies the familiar bromide that awareness is the first step towards change.

Socrates believed that people only do bad because they don't know the good. Paul McCartney reportedly said that "if slaughterhouses had glass walls, everyone would be vegetarian." These are nice sentiments but they're naive. People who oppose the death penalty sometimes say that executions should be televised as a means of demonstrating how brutal it is, but when executions were public, they were enjoyed like sporting events. So I regard the comfort that people have with talking openly about the killing of turkeys, even if only around Thanksgiving, as a sign of how far we vegans have to go to win hearts and minds.

Hannukah, meanwhile, celebrates the military triumph of a group--the Maccabees--who were the Second Century BC equivalent of the Taliban. Today largely described as fighting for national self-determination and religious freedom, the Maccabees were religious fundamentalists who also attacked and forcibly converted "Hellenized" Jews, i.e., Jews who had assimilated to the dominant Greek culture--with its dreaded mathematics, drama, art, and philosophy. The Python boys were depicting a clash that occurred a couple of centuries after the Maccabee revolt, but they nicely captured the problem with the fundamentalist/nationalist Jewish uprising in the "What have the Romans ever done for us?" scene in The Life of Brian.
If highly problematic in its origins, Hannukah has nonetheless become a largely harmless holiday for contemporary American Jews. We celebrate this relatively minor festival as a Jewish alternative to Christmas. And since Christmas itself is probably merely an adaptation by Christianity of pagan festivals, modern Hannukah is a simulacrum of a simulacrum. We can decry Hannukah's true origins (as I have just done), but that really misses the point. Hannukah's significance has nothing to do with history and everything to do with the calendar. If Tisha B'Av (a Jewish fast day that commemorates the destruction of the first and second Temples, as well as other catastrophes) rather than Hannukah occurred in December, American Jews would mark Tisha B'Av by giving presents and wishing one another a "happy Tisha B'Av".

One might think that Hannukah's coincidence with Thanksgiving rather than Christmas this year makes it difficult to conceptualize Hannukah as the Jewish Christmas, but in fact it's easy. The enshrinement in recent years of the day after Thanksgiving as "Black Friday"--and the still-more-recent practice of retailers holding Black Friday sales on Thanksgiving Day itself--have made of the Thanksgiving-through-Christmas season an undifferentiated holiday of consumerism, a kind of suburban sprawl on the calendar. Given this hyper-commercialization, it is fair to say that increasingly, the period from late November through late December may aptly be described as Thanksgivingmas. And so there should be nothing at all odd about American Jews celebrating Thanksgivingukkah, for it is the perfectly natural counterpart to the holiday now celebrated each year by most of our Christian neighbors. It may take another 70,000 years for Thanksgivingukkah to return as an official matter. But in spirit, Thanksgivingukkah will now be an annual event.

Wednesday, November 27, 2013

Last Thursday, I posted some thoughts here on Dorf on Law about the controversy over new National Football League rules that were passed before this season, which are part of the ongoing effort to try to reduce the carnage of injuries to offensive players, especially quarterbacks. (OK, "carnage" is clearly too strong a word. Carnage describes what happens to the animals who will be killed to be served on American dinner tables tomorrow, while we watch football players injure each other. But I digress, and tomorrow's post by Professor Dorf will expand upon the question of how vegans feel about Thanksgiving).

Whatever one thinks about the new rules (versions of which have also been adopted by the NCAA for college games), the prevalence of serious injuries in football is frightening. After 11 games of a 16 game season, 32 NFL teams this year have placed a total of 47 quarterbacks on the injured reserve list. In the college ranks, the University of Florida Gators have had a disappointing win-loss record because they are now starting their fourth-string quarterback, with the first three kids (and, as I understand it, 9 of the other 21 starters) suffering season-ending injuries. (The outcry from Gator fans? The coach should be fired, and even this extreme number of injuries cannot be used as an excuse!) The University of Texas announced yesterday that one of their quarterbacks will not be able to play anymore, because of recurring symptoms from a severe concussion. There is, to say the least, no reason to think that the new rules are making the lives of offensive players cushy.

In any event, I wrote my comments last week in reaction to the general illogic of an argument, which we hear mostly from current and former defensive players, that changing the rules in a way that they do no like is somehow fundamentally wrong, amounting to nothing less than an assault on the nature of the game itself. My interest in that logical error is more general, because we see variations of it all the time in policy debates. And sure enough, even though I was unaware of the analogy at the time that I wrote my post, it turned out that my comments could rightly be applied to Republicans' complaints about the changes to the filibuster rule that Democrats implemented last week, an application of my argument that I belatedly described in my Dorf on Law post two days ago. "It's different!" is not the same as "It's illegitimately different," unless the difference can be assessed on the basis of some clear standard, which does not exist in football or the U.S. Senate.

In a response to a comment on my earlier post, however, I also promised to return to a different aspect of this debate. One version of the basic complaint, as formulated by one former NFL defensive lineman, is that the new rules "make it harder to do my job." I argued that the defensive players' job descriptions include playing by whatever rules the league adopts. Some rules (like offensive holding, prohibitions against crack-back blocks, and so on) make it harder for offensive players to help their teams score. Other rules (no head slaps, no roughing the passer, and so on) make it harder for defensive players to prevent the other team from scoring. None of the new rules reduce the number of players on the defensive side of the ball, I noted, so every team will be forced to field a defensive squad, and every team's defense will play by the new rules.

Although that is all true, it raises two further interesting points. First, it is possible that, when a defensive player says, "It's harder to do my job now," he could at least mean that the new rules will result in his position being reduced in economic value. If sacks are no longer a big part of being an effective defensive player, then big salaries will not be coming the way of sack specialists. No matter how many points are scored in games, however, the ability to play defense will be valued. Even in the NBA, where teams average about 90 points per game, teams seek out and pay defensive specialists.

Currently, defensive ends and tackles are the second- and
fourth-highest paid positions (ahead of running backs, receivers, and tight
ends), so they are starting from a rather high point. Let us assume, however, that the new rules tilt the salary balance, so that offensive players will soon get a bigger slice of the salary pie. Everyone acknowledges that the reason the NFL is adopting the new rules is because of money. Current and former defensive players, in fact, preface their complaints by fairly spitting, saying things like, "Come on, we know the NFL is doing this to protect the guys who sell the tickets!"

Right. Former players also complain about how they were born too soon, because there is so much money to be made by current players. In just the five-year span from 2007 to 2012, NFL minimum salaries rose by roughly one-third. If the new rules allow the league to maintain fan interest -- and no one is claiming that the NFL is doing any of this for humanitarian reasons -- then the defensive players are going to be sharing in that larger pie. Although it is possible that the new rules could make defensive players' relative salaries drop so far that the expanding pie will not make up the difference, color me skeptical. I acknowledge the logical possibility that defensive players could lose money, and thus "make it harder to do my job" (or at least not be paid as much to do a slightly different set of tasks), but that is an empirical prediction that seems far-fetched, at best.

There is, however, a second way in which it could be true that any new set of rules can make it harder for players to do their jobs. Different rules will not just force current players to play differently, but they are also virtually certain to cause teams to make different personnel decisions. Consider how different basketball would be if there were no 3-point shot, and goal tending were legal. Suddenly, Hall of Famers like Reggie Miller would have been nonviable in the league, and jokes like Gheorghe Muresan and Manute Bol would be among the all-time greats. Hockey leagues that call tight penalties employ faster players with more finesse, whereas hockey leagues that allow fights and hard checking employ bigger, slower players.

It should be no surprise that this has happened in the NFL, too, most obviously in the rule changes from the early 1980's that made it easier for offensive linemen to use their hands without being called for holding. This had the effect of de-emphasizing foot speed and mobility and emphasizing size and strength, which had the very predictable effect of adding dozens of pounds to the size of offensive linemen. Steroids and human-growth hormone were part of it, but the cause-and-effect between the rule changes and who could make a living as an NFL offensive lineman is clear.

When a guy says that "the new rules make it harder for me to do my job," therefore, that can certainly be true in the sense that he, personally, might lose his job if new rules make his skill set unmarketable (and he is not able to adapt). This is certainly not what the former players are saying, because the new rules do not affect them, making their grousing little more than "when men were men" silliness. However, even if the people who play defense under the new rules will be paid more than under the old rules, some guys will lose their jobs, while others will replace them.

This, however, simply poses the baseline question in a different form. Why are the current players entitled to prevent rules changes that disfavor them, when other hard-working athletes could thrive under different rules? To say that different rules have different outcomes, both absolutely and distributionally, is hardly news. In fact, that is why I find the baseline problem to be so generally important.

The people who run a sports league, therefore, can use the rules not just to change the way current players play the game (discouraging helmet-to-helmet hits, for example), but also to change who plays the game. If the problem is that 300-pound men can do too much damage to 220-pound men in violent collisions, then one response is to change the rules about how the larger men can hit the smaller men. Another response is to change the rules to simply ban the larger men. A third, however, is to change the rules not just to change how one group of men hit another group of men, but to make it less likely that any team's competitive advantage would be served by hiring behemoths.

There is a reason that we do not see players with huge stomachs playing in the NBA, but we do see it in the NFL (and, to a diminishing extent, in baseball and golf). Or, to be more accurate, there are many reasons. When the NFL changes its rules, it should not think of the ultimate effects on personnel decisions as an unintended consequence, but as a goal in itself.

Tuesday, November 26, 2013

In my latest Verdict column, I discuss filibuster reform in the Senate. I ask whether Democrats should fear that when Republicans next control the Senate, they will abolish what's left of the filibuster. I conclude that with respect to appointments, the filibuster systematically favors neither Republicans nor Democrats (assuming equal likelihood of control of the chamber over the long run, which is what one would predict in a two-party system). I also argue, however, that over the long run, the ability of 41-50 Senators to filibuster aids Republicans because, other things being equal, Republicans are more likely to win by preventing the government from doing anything than Democrats are. Even though "the era of big government is over," as President Clinton said, Democrats still favor bigger government than Republicans do--and that means that the ability to prevent Congress from doing anything is, on average, more useful to Republicans than Democrats. So if Mitch McConnell is threatening to do away with the filibuster for legislation as well as appointments, Harry Reid should reply: "Bring it on."

Here I want to ask a question that is raised by the latest change: Is there any principled basis for it? The Senate (or rather, nearly all Democratic Senators and no Republican Senators) voted to retain the requirement of 60 votes for cloture on legislation and Supreme Court nominees but to go to a rule of simple majority for cloture on appointments of executive officials and lower court judges. I assume that there are numerous political and pragmatic accounts one could give for drawing the line there, but the question is whether there is any reason of principle. My answer is maybe.

The case for the filibuster is weak with respect to executive appointees, who are supposed to carry out the President's program. The Senate has a role to play in ensuring the professional qualifications of such appointees but beyond that, it is hard to see why a minority in the Senate should be entitled to prevent the President from assembling his or her own team.

The case for the filibuster is also fairly weak with respect to ordinary legislation. It's true--as Washington reportedly said to Jefferson--that the Senate's purpose is to cool hot passions, and a supermajority requirement for ordinary legislation serves that purpose. But the Constitution pretty clearly indicates that the ordinary Article I, Section 7 process for legislating requires only a majority vote of each chamber. That's a negative implication from the Constitution's inclusion of specific supermajority requirements for other matters, such as overriding a veto, proposing constitutional amendments and ratifying treaties. And the Senate can play the role of "cooling saucer" even without the filibuster, simply by virtue of the longer, staggered, terms that Senators serve. In preserving the filibuster for ordinary legislation, perhaps the Senate Democrats who supported Reid's nuclear option disagreed, thinking that the filibuster remains important for the cooling function of the Senate.

The case for the filibuster is probably strongest with respect to judicial appointments. After all, federal judges and Justices serve for life and are meant to be politically independent. In principle, a super-majority requirement for judicial appointees should induce Presidents to nominate moderates rather than ideologues. (For an argument along these lines, see Christopher Eisgruber's The Next Justice.) But it doesn't always work out that way, especially not lately.

Is there a reason to distinguish between lower court judges and Supreme Court Justices? Here I suppose one might say that a filibuster should be reserved for extraordinary circumstances and that lower federal court judges simply don't exercise sufficient power to render the nomination of any particular judge extraordinary. By contrast, we can at least imagine a Supreme Court nomination presenting extraordinary circumstances that warrant the extreme step of a filibuster.

All that said, like most commentators, I expect the filibuster to disappear in all incarnations at some point in the not-too-distant future.

Monday, November 25, 2013

This past Thursday was a bit of an odd day for me. In writing my Verdict column, as I was trying to come up with a list of things that Republicans might offer to Democrats as part of "real bargaining" (as opposed to hostage-taking), I noted that "Democrats want Republicans to stop filibustering the President's judicial nominees." Later in the day, when I wrote my Dorf on Law post, I described how the lack of a neutral baseline defining the rules of "true football" made recent complaints about rules changes in the NFL ring hollow.

Several commenters on my DoL post noted immediately that my analysis there could easily apply to Republicans' complaints about the changes that Democrats had passed in the filibuster rules that day. One commenter said that he assumed that I had intended the comparison. I have to admit that I was not doing any such thing. I had, in fact, not even been checking my usual news sites for a couple of days. Even though I knew that the filibuster was suddenly a hot topic again, I did not know about the vote, and I certainly had not read any of the Republicans' specious complaints.

Now that I have caught up on the news, however, I see that the comparison is even more apt than I could ever have planned. My point in Thursday's post was that you can just as easily have football with rules that "favor the defense" as you can with offense-favoring rules, and the only thing that you can say is that the two sets of rules are different. You can assess whether you like the way the game is played under the two sets of rules, applying some external set of criteria, but you cannot say that one game's rules fundamentally differ from some mythical "rules of nature" that supposedly define football.

The over-heated, silly comments that we have been hearing from current and retired NFL defensive players are nothing compared to the Republicans' complaints about Thursday's changes. John McCain called them a "travesty," which amounts to little more than one of his usual temper tantrums. ("I liked the old rules. The new rules are a travesty!") He can complain about losing his power all he likes, but if by travesty he means "travesty of justice," he is simply wrong, because there is no baseline definition of justice that requires the Senate to have a 60-vote requirement (or any other number) to confirm executive and judicial nominees.

The essence of the silliness, however, was captured by faux-moderate Republican Senator Lamar Alexander, whose name appeared on the byline of an op-ed in the Washington Post on Friday. Alexander was at least correct to point out that Democrats have similarly raved about the sanctity of the filibuster in their time, quoting Sen. Carl Levin (who was quoting former Republican Sen. Arthur Vandenberg) as follows: "If a majority of the Senate can change its rules at any time, there are no rules."

Other than the "gotcha" aspect of this line having once been uttered by a Democrat (although Levin himself voted against the changes on Thursday), where is the content here? Beyond the complete lack of a filibuster in the Constitution or any other authoritative source of law, what does it mean to say that there are no rules because the Senate can change the rules at any time? The process of making rules is apparently still set by majority rule. Otherwise, the 52-48 vote would not have changed anything. But that rule is just as arbitrary (albeit appealing to core notions of democracy) than a rule that requires that, say, a procedure cannot be changed until the change has been voted upon three times, with progressively larger numbers of Senators voting for it on each iteration. That fanciful rule, like any other, could be gamed, just as the most recent version of the filibuster procedure had been gamed.

So, yes, the similarities between the complaints about recent NFL rule changes and the Republican outcry about the filibuster changes made the timing of my Thursday post inadvertently apt. Both sets of complaints are based on the fundamental error of claiming that one's preferred set of rules is "right" in some deep sense of an "untilted playing field." This is obviously not to say that any set of rules is as good as any other, but that the goodness or badness of the rules cannot be assessed by some appeal to a Platonic ideal of rules.

It is one thing to listen to people like Ray Lewis and Mike Golic complain about the loss of the good ol' days when they could more easily injure their opponents. Seeing Republican Senators talk about the august nature of the Senate, while insulting the intelligence of anyone listening to their whining, is quite another. Beyond the Republicans' completely situational complaints, however, there is an additional interesting lesson to be learned from last week's events.

As I noted above, my Verdict column offhandedly included a reference to the raft of Republican filibusters of Obama's judicial nominees. (I could also have mentioned their filibusters of his executive-branch nominees, and their filibusters of legislation, the latter of which are still possible under the new rules.) I offered this example in the same generic category as tax increases on the rich, or labor law reforms. The idea was that the Republicans could use the filibuster as one of their bargaining chips. For example, they could say: "I'll agree not to filibuster 10 of your judicial nominations, and I'll also give you a $2-per-hour increase in the minimum wage, a tripling of the budget for Food Stamps, and a reduction in the eligibility age for Medicare to 25, if you'll agree to repeal the ACA, and ... ."

In the context of that column, I was merely expanding on a point that I had made a few weeks ago here on Dorf on Law, which is that negotiating requires giving as well as getting. This is in contrast to the threat not to increase the debt ceiling, and arguably also the threat to shut down the entire government, because the extreme damage from those actions is so different from the consequences of agreeing to the various tradeoffs involved in what used to count as normal legislating. ("You want the capital gains tax rate to go from 15% to 25%, and I want it to go down to 12%. I think things will be worse than necessary if we compromise at 19%, but I don't have the votes to push it lower. Oh well.")

Now consider what the Republicans have inadvertently revealed. The basic objection to Republican hostage-taking regarding the debt ceiling is that there is no legitimate policy interest in refusing to increase the debt ceiling (and thus preventing the country from honoring its commitments), because the normal legislative process will determine the level of debt in the future. This, in turn, means that if Republicans refuse to increase the debt ceiling, and thus risk destroying the financial system and the economy, the President must choose not to negotiate with hostage-takers, because there are legitimate means by which one's debt goals could be reached.

It is true, of course, that people can and do negotiate with hostage-takers all the time. Republicans thus try to meta-frame the argument by saying that the President could negotiate over the debt ceiling (again), so he is the one who would be responsible for any harm that might come to the hostages. That, however, is no different from a kidnapper shooting his victim and then saying, "See what you made me do?!"

When President Obama agreed to negotiate over the debt ceiling in 2011, he did not have to do so, and doing so was quickly seen to have been a grave mistake. Yet he had acted as if negotiating over the debt ceiling was just another normal part of the log-rolling process by which legislation is created.

For the past five years, Senate Democrats had been going along with the idea that it was normal and acceptable to have to garner 60 votes to do anything. Republicans not only threatened to use the filibuster, but they used it repeatedly. Finally, Democrats said, "Hey, we don't have to do this anymore. We've been begging them to do things differently, and we probably would have agreed not to do this if they had allowed even one of Obama's DC Circuit nominees to go through. Time to stop negotiating, because there is nothing stopping us from getting what we want without having to give them anything."

I suspect that the same thing will happen, if the Republicans ultimately carry through on their threats not to increase the debt ceiling. The President will find a way to invoke Buchanan-Dorf, the Republicans will scream about lawlessness, and so on. What we saw last week was a smaller version of that category of political standoffs where one side suddenly realizes that they have been needlessly constraining themselves. While it is always admirable to see partisans refuse to exercise the full extent of their powers (for reasons of comity, public relations, and so on), last week's events are a telling example of what happens when one side overplays its hand.

Friday, November 22, 2013

In a characteristically thought-provoking post on the Fed’s
monetary easing policies earlier this week, Professor Dorf suggests that in a
certain sense, the wisdom with which Chairman Bernanke’s Fed has managed
post-crisis credit and liquidity conditions is a fortunate accident – one that
we might not, strictly speaking, have earned through legislation.There are two mutually complementary
reasons. First, what many take for the traditional
anti-inflationary rationale behind central bank independence (as manifest both
in the term structure of Fed Board appointments and in the Fed’s substantive
mandate) is not implicated in the current credit environment.And second, there is no inherent, structural
reason to expect politicians to be biased toward tight money policies as there
is to expect them to be biased toward loose money policies, hence no reason to
suppose that the Federal Reserve Act’s framers meant to insulate the Fed from
politics – that is, to render it more or less independent – for any reason other
than inflation-prevention.As Professor
Dorf points out, the two reasons jointly suggest that the Fed’s now filling-in
for a derelict Congress by using expansionary monetary policy as a substitute
for missing fiscal policy is more happy accident than it is anything that we as
a polity have acted through White House and Congress to assure.

It seems to
me that Professor Dorf is quite right, but it might be helpful nevertheless to
add a few supplementary observations concerning the evolution of central bank
theory, practice, and legislation in recent decades.For if what I’m about to report is correct,
then there is at least one important sense in which current Fed policies, evenin the very forms they’re now taking,
can be said in effect to have been legislated – or at the very least
legislatively ratified.

Here’s what I
mean, proceeding in order from theory, to practice, to legislation.

First as a matter of theory, the traditional ‘sound
money,’ anti-inflationary rationale for central bank independence can be, and
has indeed long been in the process of being, generalized and refined along two
dimensions.The generalization and
refinement begin by noting that inflation has a contrary – deflation – which is
just as apt to occur over time as inflation.Indeed there are structural reasons, to which I’ll return, for expecting
so, and these are even deeper seated than are the structural reasons of which we
typically think when we think of the anti-inflation mandate alone.The generalization and refinement then
conclude by recognizing that inflation and deflation – and, indeed,
hyperinflation and hyperdeflation – can and do tend to occur in more than just
consumer goods and services markets.They happen in financial markets as well.Indeed a financial asset price bubble just is
a species of hyperinflation, and a bubble-following bust is symmetrically an asset price
hyperdeflation, as argued here.

Now, asset
price inflations and deflations, via the so-called ‘the wealth effect,’
sometimes spill into the real economy to induce counterpart consumer price
inflations and deflations – often with devastating effect.Frequently, in fact, the latter bring on what
the great American economist Irving Fisher dubbed ‘debt-deflations.’They do so any time that the antecedent asset
price bubble has been significantly fueled – as most if not all of the worst of
them are – by cheap credit, in a manner that incents even rational market
participants to ‘leg’ the proverbial ‘spread’ between low borrowing costs and
high capital gains appreciation rates.When variable prices of the latter sort ultimately drop in the bust, and
the fixed debt obligations incurred in financing the speculative asset purchases
do not, victims are left with potentially crippling private debt overhang.Growth- and employment-underwriting consumer
expenditure in consequence takes a significant hit, and protracted slump is the
end product.Such is the substance of
Fisher’s regrettably forgotten ‘debt deflation theory of great depressions.’

So what does this have to do with central banking
theory?The key point, in my view, is
that asset price hyperinflations and debt deflations are what I call ‘recursive collective action problems.’In a
classic collective action problem, multiple individually rational actions
aggregate into a collectively damaging outcome.Such problems take on recursive properties when the rational actions in
question are rational responses to antecedent actions of the same type.Where the recursive element is present, a
collectively ‘damaging’ outcome can become downright calamitous.For recursive processes lack tolerable stable
equilibria; things either grow worse and worse or they settle into unbearable
patterns – as that other celebrated
20th economist, J. M. Keynes, in effect noted when diagnosing what he
dubbed ‘liquidity traps’ and ‘paradoxes of thrift.’

Now once attention has been called to it, it is easy
to see the structure just outlined at work in any inflation or deflation –
including those that afflict financial markets and broader macroeconomies.While prices are rising and credit remains
virtually limitless and cheap as it did for much of the late 1990s and early
2000s, it is financially rational for market actors to borrow and buy, then to
borrow and buy more as previous iterations of the process drive prices yet
higher without correspondingly raising the cost of credit.Subsequently, when confidence in the
soundness of assets evaporates and the ‘run’ or the ‘fire sale’ begins, it is
symmetrically rational for market actors to rush to avoid being last out the
door.There is nothing that any one
market participant can do to arrest the upswing or downswing, after all, so her
best response is simply to join in the race and work hard not to lose.But the rationality of each in these settings
is the futility of all.

Recursive collective action problems of this sort, as I’ve argued elsewhere, are pervasive in financial markets and
macroeconomies.What can – what do – we
do about them?To solve a collective
action problem requires a collective agent – some agent able to act in the name
of all.That agent must act as to render
no longer rational such decisions as, when aggregated, bring on the calamitous
outcome.In the case of an asset price
hyperinflation, that is done by closing the spread between low borrowing costs
and high capital appreciation rates – that is, by raising borrowing costs,
taxing away capital gains at increasing rates, or both.In the case of a corresponding asset price
hyperdeflation and ensuing debt deflation, the collective agent symmetrically
does the contrary.It acts to lower
borrowing costs, stimulate asset price growth, or both.In extreme cases, it must act to pare down
private debt too – either directly, by facilitating loan modifications or
bankruptcy cramdowns, or indirectly, by pumping up asset prices and thereby
trimming the relative reach of the private debt
overhang.

Now if we look at the evolution of central bank
practice over the past century or so, I think we can spot what amounts to an
implicit recognition on the part of central bankers that they are the requisite
‘collective agents’ upon whom I have just called.On the upswing side of the business or credit
cycle, central banks have long acted to counter consumer price inflation, of
course, but now have begun looking for ways to curb financial asset price
hyperinflation as well.The old ‘lean versus clean’ debate that used to divide American central bankers from their
counterparts at the Bank for International Settlements in Basle, in other words,
appears at last to have been won by the ‘leaners’ – those who, like Fed Chairman
Martin nearly five decades ago, view the job of the central bank as that of
‘leaning against the wind.’You’ll find
evidence of the shift every time you read or hear the words ‘macroprudential
regulation’ or ‘systemic risk regulation’ in connection with the word
‘financial.’The name of the game now is
to preempt financial asset price hyperinflations before they commence, just as
it’s long been to act similarly in respect of gathering consumer price inflations.You can read more about these developments
here and here, in two papers stemming from work I have done for the New York Fed
and the International Monetary Fund in recent years.

On the downswing sides of the business and credit
cycles, central bankers have also long acted to counter consumer – and asset –
price deflation.Indeed that’s precisely what ‘cleaning’
refers to when one speaks of ‘leaning or cleaning.’Walter Bagehot famously called attention to
the cleaning role, under the now canonical ‘lender of last resort’ rubric, back
in the late 19th century.And
even Fed Chairman Greenspan believed in an energetic ‘cleaning’ role, his having
pursued it a bit overzealously post 9/11 being thought by many to have played a
critical role in fueling our recent housing price bubble.The best way to view what Chariman Bernanke’s
Fed has been doing since 2008 – and what its Japanese counterpart has been doing
even longer and its European counterpart is beginning to do now – is,
accordingly, as a simple and straightforward intensification of what central
banks long have done after busts.From
easing credit and monetary conditions through commercial paper or treasury
security purchases as was done in the 19th and 20th
centuries, respectively, central banks are now moving toward easing conditions
yet further – and propping up particular asset class prices in particular
wealth-effect-salient markets like housing – by purchasing additional classes of
financial asset like mortgage backed securities.I for my part have proposed yet more incremental, fine-tuning extensions of the Fed-as-market-actor role in the name
of credit-modulation.

So have we actually legislated this still evolving
collective agential role for our central bank?Is the Fed statutorily authorized to act as a collective agent of the
kind I’ve described?In two mutually
complementary senses, I think that it is.To see why, note first this
entailment of the central bank’s role as I have just sketched it: the
‘collective’ agent that I am describing is a countercyclical agent.The central bank’s role is to buck trends and
act contrary to deeply rooted, otherwise inescapable business and credit
cycles.It is to be cyclically
contrarian.It’s to act bearishly during
bullish times, and to act bullishly during bearish times.It’s meant to steer us clear of, or bump us
out of, intolerable equilibria – underspending, underemployment equilibria
during busts and ensuing debt deflations, and overspending, overborrowing
equilibria during inflations.

But now note this further entailment of my
characterization of the central bank’s role: the countercyclical agent must by definition
be a countermajoritarian agent.That which fuels cyclical movement, after
all, is majoritarian action – aggregated individually rational actions.For the good of all, then, the central bank must
act contrary to all, precisely
because its bailiwick – the financial, monetary, and macro- economies – is
structurally susceptible to recursive collective action problems per which each
person’s acting rationally is all people’s acting self-defeatingly.In this sense, the case for a
countermajoritarian central bank might be even stronger than that for
countermajoritarian courts.After all,
crowds seem merely susceptible to
‘rushes to judgment’ on various matters, but seem downright doomed by the structure of reciprocal
action itself to financial hence macroeconomic boom and bust cycling.So have we legislated this – the central bank’s institutional
contrarian role?Have we deliberately
conferred a countermajoritarian function upon the Fed in the way that we have on
the federal courts – by insulating its key personnel from political pressure and
by formulating its mandate in sufficiently capacious terms?I think that we have – both implicitly and,
to a degree, even explicitly.

Note first that the Fed’s enabling legislation charges
it with acting to maintain both ‘stable prices’ and ‘maximum employment.’What do those phrases mean?Well, long before these two sides of the
so-called ‘dual mandate’ had both found their way into the Fed’s enabling act,
economists, policy analysts, and members of Congress alike had come to
understand that stable prices are maintained by tightening credit and monetary
conditions in the face of inflationary pressures, and loosening the same in the
face of deflationary pressures.They
also understood that ‘maximum employment,’ at least as a central bank mandate,
is pursued through the same aforementioned loosening of credit and monetary
conditions, and that ‘going too far’ in this direction could under some
conditions imperil the successful execution of the price-stability-maintenance
function.

The Fed has in consequence viewed its role for decades
as maintaining a balance between maximum sustainable employment on the one hand,
price stability on the other hand.It
has acted, in other words, to arrest declining employment so as to prevent its
morphing into indefinite underemployment equilibrium on the one hand, and to
arrest increasing prices so as to prevent their morphing into consumer price
hyperinflations on the other hand.This
was the case well before the current wording of the mandate was formulated in
the late 1970s, and the latter can accordingly be viewed, along with the
enhancing of Fed independence during the 1950s and its continuation ever since,
as implicit Congressional ratification of the Fed’s gradually developing
countercyclical, hence countermajoritarian, role.

But wait, you
might say.Given that ‘stable prices’
used to be taken, in effect, to allude only to consumer price inflation, can we
plausibly take that phrase to embrace debt deflations and financial asset price
bubbles and busts too?I don’t see why
not.Since only the word ‘prices,’ not
the word ‘inflation’ or the phrase ‘consumer prices’ is used, and since it has
always been understood that there is at least some relation between the financial and
‘real’ economies such as enables dysfunction in the former to spill into the
latter, it would seem that the Fed’s – along with other central banks’ –
gradually coming to appreciate that financial markets are as prone to
destructive yet modulatable cycling as are consumer goods and services markets
was foreseeable enough by those who introduced the ‘stable price’ and ‘maximum
employment’ mandates, and presumably embraced accordingly by Congress.Why not, then, read the Federal Reserve Act
as both (a) ratifying developments that had occurred in central bank practice as
informed by developing theory by 1977 when the Act was amended, and (b)
embracing developments that occur along that same trajectory since then?

By Mike Dorf
Notwithstanding Prof. Buchanan's observation earlier today that there was no new substantive post, let me assure readers that there's a lot in the works. Prof. Hockett will have a post on central banks up soon in which he builds upon my observations earlier in the week regarding the serendipitous independence of the Fed.

Meanwhile, various readers have asked me what I think about the change in the cloture rule in the Senate (aka the nuclear option that has now been exercised). The answer is it's complicated and so rather than dash something up immediately, I'm going to think about it for a while and probably write my next Verdict column about that topic--which will run in 12 days along with an accompanying blog post. Between now and then, I'll also revisit the Richie Incognito story (as promised earlier this week), and next week will feature more by Prof. Buchanan, a follow-up by Prof. Kalhan on the continuing stop-and-frisk 2d Circuit litigation, and a piece by Prof. Colb to accompany her forthcoming Verdict column on the recently argued Supreme Court case involving a sentence enhancement for causing death via heroin.

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/author/buchanan/#sthash.aRZJxkQK.dpuf

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/author/buchanan/#sthash.aRZJxkQK.dpuf

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/2013/11/21/republicans-need-understand-possible-negotiate-without-taking-hostages#sthash.vvD2aVaq.dpuf

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/2013/11/21/republicans-need-understand-possible-negotiate-without-taking-hostages#sthash.vvD2aVaq.dpuf

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/2013/11/21/republicans-need-understand-possible-negotiate-without-taking-hostages#sthash.vvD2aVaq.dpuf

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/2013/11/21/republicans-need-understand-possible-negotiate-without-taking-hostages#sthash.vvD2aVaq.dpuf

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/2013/11/21/republicans-need-understand-possible-negotiate-without-taking-hostages#sthash.vvD2aVaq.dpuf

Republicans
Need to Understand That It Is Possible to Negotiate Without Taking
Hostages - See more at:
http://verdict.justia.com/2013/11/21/republicans-need-understand-possible-negotiate-without-taking-hostages#sthash.vvD2aVaq.dpuf

Thursday, November 21, 2013

For the last few months, I have gotten into the habit of watching "Mike & Mike in the Morning," a sports talk radio show on ESPN2. Unlike almost all of the other sports talk shows, that show features reasonable discussions by knowledgeable people about interesting questions. There is no contrived controversy (except when they are being very obvious about their contrivance, allowing the audience to be in on the joke), and there is very little mindless tough-guy talk.

The show has handled almost every major topic quite well, with the hosts (Mike Greenberg, a sports reporter now in his 40's, and Mike Golic, a former NFL defensive end who recently turned 50) taking informed positions -- often the same position, because they do not feel compelled to gin up controversy -- while also being willing to present contrary evidence and arguments, and to engage in serious conversations with guests whose views differ. Their recent handling of the Martin-Incognito bullying allegations has been exemplary, as was their treatment this morning of the developments regarding a sexual assault allegation against the quarterback for Florida State.

The show has, however, fallen down significantly regarding two issues. The first is an extended series of jokes mocking veganism. I might discuss that issue more in a future post, but here I will only say that it is beneath them. They know better, yet they are gleefully engaging in a display of ignorance that should embarrass and shame them. The second issue is the recent changes to NFL rules that are designed to reduce injuries to offensive players, especially quarterbacks. There, the discussion has been bizarre and simply wrong, but in a surprisingly interesting way.

The reason that I find rules changes in sports interesting is that they provide such a clear analogy to changes in the rules that govern the economy, and society in general. As I have discussed many times on Dorf on Law (see, e.g., here and here), standard economic analysis founders on "the baseline problem" (note: this is not a basketball reference), which is the simple observation that there is no "natural" set of rules to govern society. If you change, say, patent laws so that inventions are easier to protect from competition than they currently are, there is no legitimate way to decide whether the old rules or the new rules are the correct baseline, with all other rules counting as deviations from that baseline. This makes it pointless to discuss, most prominently, whether legal changes are "pareto-efficient," because you can only describe what is inefficient by comparing it to some arbitrary baseline that you have deemed "correct" in some sense.

This argument is often difficult to comprehend in society at large, because there are so many moving parts to the legal system and the economy, and because people have so many unexamined assumptions about what should be included in the baseline. Therefore, when I teach this concept in my classes, I almost always refer to some sport or other game to illustrate the point. If tennis, for example, did not allow second serves after a "fault," then the game would be different, because servers would have to be more careful. There is nothing right or wrong about either rule. That the current game allows a second serve is simply a historical baseline, but not a logical one. [NOTE: I have corrected the third sentence in this paragraph, which begins "If tennis ... ," to reflect my intended meaning. I had misused the word "let" in the originally published version of this post.]

What I find funny about the current debate about the NFL's safety initiative is how nutty so many people have become in discussing it. I do not find it surprising when, for example, Mike Ditka says silly stuff about injuries being "just football." What I do find interesting is how many current and former defensive players are somehow viewing the rules changes as utterly illegitimate, making it "impossible to play defense." (The most ridiculous of these statements came from the recently retired Ray Lewis, who not only complained about the new rules, but he actually screamed that the league needs to respect the players' "manhood." He is an embarrassment, at best, but that example is hardly his greatest sin.)

This meme, that the defense is being harmed by rules changes, has been a recurring complaint from Mike Golic over the years, and he is especially incensed now. In a way, I understand how much he takes it all personally. He is evidently thinking, "Gee, when I played, a lot of what I did would have been penalized under the new rules. But I wasn't a dirty player, so there's something wrong with the new rules." His argument, however, perfectly captures the failure to think about the arbitrary nature of the rules of the game.

For example, he once argued that a rule change made it "harder to do my job." Well, yes and no. If his "job" is to sack the quarterback, then many rules make it harder for him to do his job. He cannot grab the offensive lineman by the face mask, twist it, and thrown the man to the ground. He cannot kick other players, or gouge their eyes with his fingers. He cannot slap opponents' helmets to disorient them. (Note that some of these examples were "just football plays" back in the day.) If a new rule increases the likelihood that a defender will be flagged and fined for a now-illegal hit on a quarterback, then Golic's job really is more difficult.

Of course, there are plenty of rules that make it harder than it could be for offensive players to do their jobs. They, too, cannot grab face masks. (Need I mention that nobody is allowed to carry a gun? That, too, is a rule that could be changed.) They can be flagged for "holding," with the definition of holding itself changing over the years. They cannot engage in a "crack-back block," which was an especially dangerous type of block that ended many, many defensive players' careers due to knee injuries.

When the rules are changed in a way that seems to favor the offense, that requires all players to adjust. If Golic were playing today, he would not do what he used to do. He would have to do things differently, and he would. I can see why he might say that the adjustment is too difficult, or that the fines seem too large to him, but the idea that the rules changes are fundamentally unfair is simply bizarre. Even Mike Greenberg, who never played, actually made the claim on yesterday's show that the playing field used to be even between offense and defense, but it has now become tilted against the defense. (He even illustrated the tilting with hand gestures.)

There is no question that the defensive players now need to adjust to the new rules. But it is beyond absurd to say that the playing field is unfairly tilted against the defense, or that the defenders can no longer "do their jobs." Their jobs, after all, are to play within the rules to prevent the other team from scoring. Well into the 1990's, players like Deion Sanders were applauded when they would "clothesline" other players. The vaunted Chicago Bears defense on their 1985 Super Bowl team included two defensive backs who bragged about blindsiding offensive players when the referees were not looking, referring to their activity as "head-hunting" and "just having fun, when the game got out of hand." Golic himself has talked about the mayhem that ensued when there was a turnover, and defensive players would target offensive players for vicious hits.

The point is that both teams in every game field a defense and an offense. So long as the rules are enforced evenly, the playing field is not tilted. To his great credit, former NFL coach Tony Dungy made this point -- finally! -- on this morning's show. (And to their credit, Mike and Mike did not mock him.) It is a different set of rules, which defensive players do not like, because their usual way of doing things is changing. So be it. Back in the 1970's, when some rule changes were instituted to protect quarterbacks, the Steelers' linebacker Jack Lambert groused, "Why don't we just put skirts on 'em?" One expects a certain caveman element in the league, I suppose, but there is no reason to take this whining seriously.

Of course, there is a gray area where rule changes could completely change a game. If the NFL switched to a round ball, and points were scored by putting the ball through a hoop, then it would not look like football anymore. Mark Schlereth, the former offensive lineman, argued today that the NFL's rule changes could soon lead to an NFL team qualifying for the World Cup, a humorous way to say that the essence of the game is its inherent violence and risk of injury to the players. Based on where we are, however, that slope looks neither slippery nor steep (nor short). At least Schlereth, however, is making a plausible argument.

Yes, changing the rules changes the way the game is played. That is the point. Changing the rules does not make it harder for defensive players to "make a living," because there will still be people paid to play defense, even under the new rules. If the NFL changed the rules so that offensive teams were given three downs to go ten yards (or 5 downs to go 20 yards, or whatever), the game would change. In a league where players are still lost for the season nearly every week due to serious injuries, we are a long way from a time when football looks like ballroom dancing.

Even people who disagree with me about the current state of affairs, however, should at least get a grip and understand that what they are arguing about is not a violation of some natural God-given baseline, but simply humans adjusting the rules in an effort to reduce the carnage of a game that has become ever more dangerous, even as the rules have changed to protect the players from the worst kinds of injuries.

Wednesday, November 20, 2013

By Mike Dorf
In addition to highlighting three recent publications of mine, in this post I'll say a few words about my ambivalence about Obamacare.

(1) My latest Verdict column offers the provocative suggestion that some of the apologists for Richie Incognito's bullying/hazing/arguably-criminal-conduct-towards Jonathan Martin rely on a view of character building that the U.S. Supreme Court uncritically accepted in United States v. Virginia, a 1996 landmark sex discrimination case involving the Virginia Military Institute. I'll have a follow-up blog post on it next week.

(2) A recent issue of the Boston University Law Review includes a somewhat revised version of my review of Jim Fleming and Linda McClain's book, Ordered Liberty. I previously blogged about the book and my take on it here and here. A short version of my review then appeared on Balkinization, as did a response by Fleming and McClain. The BU L Rev also includes a somewhat revised version of their response. To recap very briefly, I argue that Fleming and McClain include in their book a misguided liberal argument for freedom that parallels the religious "theodicy"--i.e., the idea that evil exists because humans have free will. In their responses, Fleming and McClain say that I misunderstand them to be making a theodicean argument they do not make, but as I note in my BU L Rev essay, I think that is pretty clearly what they wrote in their book--even if it is not what they intended to write. See, in particular, my footnote 10. In any event, as I explain in the review, whatever views Fleming and McClain themselves expressed or intended to express with respect to liberal theodicean argument, the argument itself can be found in the work of various liberals, and should be resisted by other liberals (like Fleming, McClain and myself) because it is a bad argument.

(3) The latest issue of the Texas Law Review contains my review of Andrew Koppelman's book, The Tough Luck Constitution. The book, which I highly recommend to readers, is a concise and punchy recounting of the litigation that challenged the constitutionality of the Affordable Care Act (ACA/Obamacare). Koppelman argues that "tough luck libertarianism" played a substantial role in shaping the views of the conservative Justices. I say in my review that tough luck libertarianism played less of a role than Koppelman thinks it did, because, I argue, Koppelman and other liberal constitutional law scholars (including me during the pendency of the litigation) did not take the conservatives' commitment to judicially enforceable federalism sufficiently seriously. I also explain how it is that the conservative Justices, with the exception of the Chief Justice, apparently failed to appreciate the partisan stakes of the case, even as those very partisan stakes led them to see the case as they did. I call this phenomenon "nonpartisan framing," using Bush v. Gore as a comparator.

My review is not exactly a mea culpa. I continue to think that the Court should have upheld the ACA under the Commerce Clause and should have upheld the Medicaid expansion under the Spending Clause. But I do think I was wrong to have regarded the argument against the ACA insurance mandate's constitutionality as essentially frivolous. In the heat of the battle, I--and other liberal scholars--seem to have forgotten how malleable constitutional doctrine can be. Put differently, I think the anti-mandate position of CJ Roberts and the four-Justice dissenting opinion in the ACA case was wrong but not more wrong than other doctrines that federalism-minded conservative Justices have invented in recent years, like state sovereign immunity doctrine (or doctrines in other areas tha liberal Justices have invented).

Why am I able to take a more philosophical and detached view of the case now? After all, the GOP obstructionism that first gave rise to the opposition to the originally-conservative-inspired ACA is very much with us. And with the flawed rollout of the health insurance exchanges potentially jeopardizing the ACA's viability, it might seem that the heat of battle remains quite hot.

The answer is that I don't have much enthusiasm for the ACA. Yes, I think that Obamacare is better than the status quo ante, but I share the sense of many critics on the left who find it maddening that the failures of the too-heavily-market-based approach of Obamacare is being used to discredit the sort of straightforward government program that our contemporary politics prevented Congress from enacting or the Obama Administration from even considering. For a fine statement of this critique from the left, see Robert Kuttner's recent piece on HuffPo.

Moreover, I have a further reason to keep the entire enterprise of health insurance reform at arm's length. From where I sit, it looks like nobody--not the left, the right or the center--is actually proposing anything that would subsantially improve Americans' health. Our health care reform politics is almost entirely about how to pay for medical and surgical interventions that mostly have a marginal impact on health. Obamacare has buried within it a few potential improvements relating to evidence-based medicine and the like. But the fundamental health problems Americans face are overwhelmingly a product of lifestyle choices involving (lack of) exercise and especially diet--and these are barely touched by Obamacare or anything else on offer.

Thus, for me, the entire constitutional debate about the ACA has always been upside-down. The infamous broccoli hypothetical was offered as the end of the road of a parade of horribles, when it should have been the grand marshal of a parade of wonderfuls. I concede that, absent extraordinary circumstances, no government should have the power to force-feed its citizens broccoli or anything else, but our government could do much much more to encourage people to eat more fruits and vegetables and fewer animal products and processed foods. At the very least, a sensible national health policy would begin by ending the government programs that encourage people to eat unhealthy diets by artificially lowering the price of such foods.

In the end, I care about the ACA partly as a small practical step in the right direction but more as a symbol and political tool: Failure of the ACA would be widely viewed as failure of the Democratic Party, which would have far-reaching implications on all sorts of collateral issues I care about, including environmental regulation, judicial appointments, distributive justice, etc.

Tuesday, November 19, 2013

By Mike Dorf
An NPR story yesterday morning more or less confirmed what most Keynesians and neo-Keynesians (including the WSJ reporter who was interviewed for the story) have been saying for some time: The current focus on deficit reduction in the U.S. and austerity in Europe are drags on the economy. The reporters note that the latest data show that the U.S. economy has grown at a faster rate than Japan's, which, in turn, has lately grown at a faster rate than that of the EU zone economies, which are essentially stagnant.

Those data only roughly confirm Keynesianism because of the somewhat mixed picture of economic policy in the three regions. Japan has lately been pursuing both monetary and fiscal stimulus; the U.S. has been pursuing monetary stimulus (via the Fed) and fiscal austerity (via Congress and the President); Europe has been pursuing monetary austerity (until an extremely recent announcement of credit relaxation by the ECB) and fiscal austerity (at least in the most troubled countries, such as Greece, Italy and Spain). A robust confirmation of Keynesianism would have Japan in the lead, followed by the U.S., followed by Europe, rather than the U.S. ahead of Japan, but Austrian/Austerion policy clearly does badly here, since it would predict that Europe would be in the lead, followed by the U.S., then Japan. In fact, a number of factors explain the better recent performance of the U.S. economy than that of Japan, including long-term economic and demographic trends in the two countries.

In any event, suppose that the NPR and WSJ reporters are correct (as I believe that they are) that, all things considered, loose credit and substantial deficit spending would have been better for the U.S. economy over the last five years than the policy we have had--loose credit combined with an initial burst of too-small deficit spending followed by a premature effort to lower the deficit. If that supposition is correct, then it is owing almost entirely to a happy accident that the Fed has been able to use monetary policy to push back against some of the harmful effects of the political branches' fiscal policy. What accident is that? Why, Fed independence, of course.

To see the accidental nature of our better-than-it-could-have-been fortune over the last half-decade, consider why a polity might decide to make its central bank largely independent of political oversight. The standard reason is the fear that a politically accountable central bank will loosen the money supply in order to provide short-term stimulus so that incumbents can be re-elected, but that the medium-term effect will be inflation. In this account, sober central bankers are insulated from political pressure so that they can make the painful but necessary decision to tighten credit before inflation gets out of hand.

And yet, since the 2008 financial crisis, the Fed has been very sensibly pushing easy credit to the chagrin of a fair number of misguided lawmakers--especially but not exclusively on the right--who would have preferred monetary tightening to complement their fiscal austerity.

Well so what? Central bank independence may have been originally conceived as a means of ensuring we got tight monetary policy when needed, but it appears that it is also useful for ensuring loose monetary policy when that is what's needed. No harm, no foul, right?

Wrong. As a matter of institutional design, in a constitutional democracy, government institutions ought to be electorally accountable, at least absent some good reason for insulating them from politics. Thus, we have an unelected (and thus largely unaccountable) judiciary because the judiciary has a special role to play in protecting the rights of minorities and in insisting upon decisions according to the rule of law rather than partisan interest. Likewise, the traditional argument for an independent central bank relied on a special reason to depart from democratic accountability--namely, the risk, noted above, that politicians would manipulate the money supply for short-term advantage if given the opportunity.

In the current political climate, it's true that the Fed has been making economically sound decisions while the elected branches of the federal government have been foolishly pursuing deficit reduction, but there is no systematic, structural reason why elected officials can't be trusted to spend sufficient sums of public money to promote economic growth. Put differently, Congress has been pursuing bad economic policy for the last several years, but it's also been pursuing bad policy in other areas as well. The fact that I (or you) think the Fed has it right and Congress has it wrong is not a justification for a politically unaccountable Fed, any more than the fact that Congress has it wrong about environmental policy or agricultural policy is a justification for a politically unaccountable EPA or Dep't of Agriculture.

We are lucky that we have an independent Fed that's acting rationally, but it is luck that, in a deep sense, we don't deserve.

Monday, November 18, 2013

By Mike Dorf
Two unrelated cases currently in the news illustrate the utility--and pitfalls--of dishonesty in adjudication. First consider the ongoing imbroglio over the 2d Cir panel's disqualification of Judge Scheindlin in the stop-and-frisk litigation, about which Prof. Kalhan has blogged here and here, while I have blogged here. In its initial October 31 order, the panel concluded "that the District Judge ran afoul of the Code of Conduct for United States Judges, Canon 2 ('A judge should avoid impropriety and the appearance of impropriety in all activities.')." Then, last week, the panel issued a superseding opinion that "clarified" its earlier order as follows: "we referenced the Code of Conduct for United States Judges. We now clarify that we did not intend to imply in our previous order that Judge Scheindlin engaged in misconduct cognizable either under the Code of Conduct or under the Judicial Conduct and Disability Act."

Right. The panel is right that its initial order did not imply that Judge Scheindlin had violated the Code of Conduct; the initial order actually said that. So the clarifying opinion is in fact not a clarification but a reversal--except of course that the panel did not reverse its actual decision disqualifying Judge Scheindlin. This is so obviously dishonest to anyone who reads the order and the "clarifying" opinion that one can only assume that the panel believed that writing a dishonest opinion was better than its alternatives.

What were those alternatives? One would have been for the panel to withdraw its initial order and reinstate Judge Scheindlin. Another would have been for the panel to stick to its guns or double down. I assume that the panel was unwilling to withdraw its initial order due to some combination of pride (i.e., unwillingness to confess error) and result-orientation (i.e., the view that even if Judge Scheindlin didn't commit a technical violation of the ethical rules, she bent the law to get the substantive outcome she wanted and so the panel was justified in bending the disqualification rules to try to get the substantive outcome it thinks is right, given the time constraints imposed by the coming change in mayor). With the option of reversal effectively off the table, a dishonest opinion that aims to reassure the world that Judge Scheindlin is a good and honorable judge was better for the panel than an honest doubling down that might have risked en banc reversal.

Thus, in the stop-and-frisk disqualification satellite litigation, dishonesty served the interests of the Second Circuit panel judges. Whether it served the interests of justice and the broader public is a harder question, but we can find cases where dishonest rulings do appear to serve these wider interests. Consider Establishment Clause litigation.

Under a very straightforward and seemingly obvious reading of the Establishment Clause, all government invocations of the Divine (as opposed to, say, purely historical or cultural references) would be forbidden. An official motto such as "In God We Trust" on the money or the phrase "under God" in the Pledge of Allegiance would be recognized as unconstitutional for the message of exclusion such endorsements send to atheists, agnostics and polytheists. So too, official prayers at the beginning of legislative sessions would be impermissible.

To be sure, there is a principled way to avoid such results. The original Establishment Clause only limited the federal government and was adopted at a time when state and local establishments were common. The standard route to incorporation of most of the provisions of the Bill of Rights is a problematic basis for incorporating the Establishment Clause against the states because anti-Establishment is a structural principle, not a protection for individual rights of the sort protected by the Due Process Clause or the Privileges or Immunities Clause. Accordingly, there is a good originalist argument for saying that the Establishment Clause doesn't apply to state and local governments. But such a holding should be rejected on three grounds: 1) Stare decisis; 2) the originalist argument here relies on the now-mostly-disfavord expectations version of originalism rather than semantic originalism; and 3) it would be crazy and harmful to say that the Establishment Clause imposes no limits on state government, as that would allow such things as clearly sectarian organized prayer in public schools and even permit states to adopt Catholicism or Mormonism or Sunni Islam or whatever as the official state religion to be supported through taxation.

Without a principled means of avoiding the conclusion that the Establishment Clause bars all religious assertions by government, the Court could try to enforce that principle, but it does not do so, and for a good--if not exactly a principled--reason: The Justices understand that the American people would not accept a full-throated interpretation of the Establishment Clause. Thus, to limit backlash, the Court has tried to avoid the implications of the Establishment Clause with a number of hand-waving distinctions.

For instance, various Justices have, at various points, dismissed real or hypothetical challenges to such things as the motto "In God We Trust" as mere "ceremonial Deism"--the fictive idea that invocations of a single God are meant only to solemnify rather than to assert any religious conception of the Divine. To see that this is bunk, imagine that you as a monotheist lived in a country with a clear polytheist majority where the official motto was "Blessed by All the gods" or "Fearful of the Wrath of the gods on Olympus". Would you think that this was mere ceremonial polytheism?

Nonetheless, while ceremonial Deism is bunk, it is useful bunk, because it enables those Justices who invoke it to avoid either having to make dreadful substantive decisions (like saying the Establishment Clause doesn't limit the states) or to make correct principled decisions that will spark backlash among the large segment of the population who believe that there really is a war on Christmas. Indeed, in many parts of the country, the American people do not even accept the watered down version of the Establishment Clause that the Court does acknowledge.

Another mechanism the Court uses to avoid the implications of the Establishment Clause is the "tradition exception," as articulated in Marsh v. Chambers. There the Court rejected an Establishment Clause challenge to official legislative prayer on the grounds that it was part of an ongoing tradition dating to the Founding. This too was bunk, because in other areas longstanding tradition is not necessarily enough to overcome compelling arguments for unconstitutionality. To be sure, longstanding tradition could be relevant to an expectations originalist interpretation, but as noted above, the Court (quite sensibly) does not consistently apply expectations originalism in Establishment Clause jurisprudence or more generally. Nonetheless, the tradition exception was useful in a case like Marsh because it meant that the Court could reject an Establishment Clause challenge without doing more widespread damage to its Establishment Clause jurisprudence. The very dishonesty of the reasoning served to limit it.

The problem is that lies often beget more lies. Steve asks Joan out for a drink; Joan likes Steve but finds him unattractive; to spare his feelings, she says she is too busy with work; Steve then runs into Joan, who is out on a date with Bill; Joan can admit that she wasn't too busy, just too busy for the likes of him, or she can lie some more, perhaps introducing Bill as her cousin who is unexpectedly visiting from out of town.

Likewise with the Court. Having pretended in Marsh that tradition justifies legislative prayer, what does it do now, in Town of Greece v. Galloway, where the Court must answer the question of just how to interpret the scope of the tradition exception? Does it apply to overtly sectarian prayer? If not, who decides whether a prayer is too sectarian and by what standards? Etc. Unless the Court "comes clean" and says that the tradition exception was always a pragmatic compromise, it cannot fashion a principled way of smoothing the boundary between the general doctrine and the unprincipled exception. Accordingly, I expect the Court to resolve the case by saying the jurisprudential equivalent of "it's not you, it's me."

Friday, November 15, 2013

In yesterday's post, I returned to the question of whether the President has any power under the Constitution to end a government shutdown. In a post two weeks ago, I had described an argument from the historian Sean Wilentz, who claimed that President Obama could have simply ended the October shutdown unilaterally, by analogizing Tea Party-led nihilism to the insurrections that Andrew Jackson and Abraham Lincoln overcame with executive action. Although I had initially felt some attraction to the Wilentz argument, I ultimately came down against it.

My initial post describing that argument was written on November 1, after I had participated in a quasi-debate at the National Constitution Center in Philadelphia. That event, however, was mostly concerned with the debt ceiling, not the shutdown. Professor Wilentz advocated what is now known as "the Fourteenth Amendment argument." I argued the Buchanan-Dorf "least unconstitutional option" argument. The third panelist, Ilya Shapiro from the Cato Institute, argued against both positions. Because my November 1 post focused on the shutdown, I have not yet written down my takeaways from the debt ceiling portion of the Philadelphia debate.

To a certain degree, the debate was not a true airing of different opinions. The panel was "balanced" in a way that made some sense under the circumstances, with two liberals taking different positions and a conservative/libertarian disagreeing. The problem is that, as Professor Dorf and I have been saying for some time, the merits of the debt ceiling debate really should not line up along standard liberal-conservative lines. There is as much reason for conservatives and libertarians to agree with us as there is for liberals to do so. Only conservative commentators who view their role as being on-call advocates for the Republican Party's argumentdu jour would automatically take the position that the debt ceiling is the most important law on the books.

Whatever else one might say about the Cato Institute, it is most definitely not a reliable lapdog for the Republican Party. On the debt ceiling issue, in fact, the institute's director had written a commentary in 2011 that was highly congenial to the arguments that Professor Wilentz and I have made about the Fourteenth Amendment.

But Mr. Shapiro understood that the point of the quasi-debate was to generate (friendly) disagreement, and he gamely agreed to argue as aggressively as possible that the debt ceiling is inviolable. He thus made the various arguments that have been reported in the press, and tried to argue the points as well as he could (given his lack of commitment to them). If anything I write here sounds like criticism, therefore, it is aimed not at Shapiro but at the arguments that he channeled for the sake of the event.

In any case, I came out of the event with a renewed appreciation of the extreme degree to which the debate over the debt ceiling has been driven by purely rhetorical, non-substantive arguments. In any debate about legal and constitutional principles, of course, the discussion will center on the meanings of words. Line-drawing will matter, categories will be distinguished, and so on. Even so, it has continued to amaze me that the people who disagree with my position on the debt ceiling have so nakedly relied on empty rhetoric.

One simple example is the tendency to characterize the Buchanan-Dorf position as "having the President blow past the debt ceiling." Our position is exactly the opposite: It is Congress that has exceeded the debt ceiling, even as it has refused to increase it, and the President's least-bad choice is to honor the obligations to which Congress has already committed the country. Still, the "blowing past the ceiling" rhetoric has been a recurrent theme in media coverage.

More fundamentally, the rhetoric is driven by misuse of the word debt itself. Professor Dorf once described the Republicans' political use of the term "debt ceiling" as little more than a pun (or, at best, a bad play on words): People do not like debt (for reasons that are completely misinformed, but I digress), so we can solve that problem by putting a ceiling on the debt. Of course, you can call the debt ceiling law anything you like, but it does not change the reality that people who want to limit debt can do so only by making legal commitments that require less borrowing.

The other play on words, which I have noted in the past, is the use of the term "cut spending" to describe what the President would do if he were to decide to default on the nation's legal obligations. Again, the public has come to believe that "government spending" is a bad thing (for equally misinformed reasons, with Republicans largely abetted by Democrats in convincing the public of a gross distortion), so they do not understand what is so bad about having the President stay under the debt ceiling by "cutting spending."

Even Professor Dorf and I have both used the term "cut spending" in our various writings to describe what the President should not do if faced with a trilemma. But that is an imprecise phrase, because it misses the key distinction between spending to which the government is already legally obligated, and decisions about spending levels that might be made in the future. It is misleading to apply the term "spending cuts" to an affirmative decision to default on the government's legal obligations, and it gives undue credibility in the public's mind to what should properly be understood as violating the law.

At one point during our debate in Philadelphia, Mr. Shapiro ventured another line (not really an argument) that has been proffered by other critics. When Buchanan and Dorf describe something as "least unconstitutional" (which is the key term in the title of our first article about the debt ceiling), the claim is that this makes as little sense as saying that one pregnant woman is "less pregnant" than another pregnant woman. Pregnant is pregnant, and unconstitutional is unconstitutional.

This is, at an initial level, just another example of the failure by those who disagree with us actually to engage with our arguments. We discussed this very question at length in our scholarship, but people who never bothered to read past the title of the first law review article would not be aware of that.

More to the point, however, it simply does not matter what we call it. Even if one took this non-argument to be more than a punch line, where would that leave us? The President still has nothing but unconstitutional choices, including the one that some people incorrectly describe as doing "nothing" (that is, refusing to honor the government's financial obligations, in full and on time). Once we have stopped giggling about whether a woman can be a little bit pregnant, what are we telling the President to do?

In other words, saying that one cannot compare degrees of unconstitutionality does nothing to solve the President's trilemma. We could just as easily have called our recommendation the "constitutionally required option," but we wanted to be clear that the Republicans are irresponsibly forcing the President into a constitutional bind.Objecting by saying
that all of his choices are unconstitutional merely recognizes the puzzle,
without giving the President a decision rule.

Last month, Professor Dorf engaged with another rhetorical
move by one of our detractors, Professor Eric Posner. Posner's
complaint was that we had said that the President would have to choose
among unconstitutional options, but he argued that there was no way a
President would ever publicly utter the words, "I am choosing this unconstitutional
option, because it's less bad than the others." No President could
ever admit that he was acting unconstitutionally. Professor Dorf eviscerated that argument, showing that Professor Posner's rhetoric about rhetoric was even more silly than usual, because it simply does not matter whether the President describes his choices as "least unconstitutional" or "constitutionally required," or anything else. Political salesmanship is completely irrelevant to our constitutional analysis.

Which brings me back to the title of this post. Maybe our "least unconstitutional option" needs a new name, to satisfy the people who have become fixated on that term. I therefore propose that henceforth, the Buchanan-Dorf recommendation be known as “the happy cuddly puppy
option.” The underlying argument is that the Constitution requires the President to treat appropriations laws and tax laws as more important than the debt ceiling law, but people who need a different label can use the new one. Or, maybe people could grow up and pay attention to the substance of the argument.